The great tax myth: by law we must collect tax: no good will come from replacing one tax with another. We will be free to keep what is ours only when a tax is abolished and replaced with nothing but reduced spending.(TAXES)

One of the bestselling books on economics today is The Fair Tax Book by Neal Boortz. The sole appeal of the book is that it promises to get rid of the IRS and the income tax. Of course, everyone hates the income-tax gatherers, and rightly so. The income tax is the root of all evil, just as Frank Chodorov said. What is not widely advertised is that Boortz's suggested replacement, namely a national sales tax, is based on the government collecting as much in taxes as it does now. If you think you hate the IRS, I can promise you that you will hate whatever agency is charged with collecting the national sales tax. The solution to the excessive cost of extra-constitutional government is not to devise another oppressive scheme for coming up with the money but to get rid of the unconstitutional programs.

While some taxes are worse than others, there is no good tax. All taxes distort production, depress economic growth, and punish producers and consumers. They all violate privacy and rob us of property. They all increase government power and reduce the scope of economic liberty. This is true of the income tax and also true of any tax that might be designed to replace it while raising just as much revenue.

It is also true that different kinds of taxes affect production and punish people in different ways. You can even use taxes to manipulate social and economic outcomes. A tax on children will discourage large families; large deductions will make children more affordable and hence more numerous. In the same way, a tax on egg production will cause producers to shift out of that market and into others.

Contrary to the textbooks, no tax is neutral with respect to its effects on the market economy. A tax on consumption will draw down on the profits of the producers and push firms out of the industry. A tax on production will diminish the number of viable competitors and thereby cause prices for the goods produced to be higher than they otherwise would be.

Many people are indifferent to taxes placed on goods that we ourselves don't produce or consume. That's why luxury taxes and inheritance taxes that affect only a small part of the population are ubiquitous, whereas there are many exceptions available for the consumption of food and drugs. Taxes on the production of things that don't affect us personally are more politically viable than those that do.

All that said, a major myth plagues many people in the antitax movement. It is that one kind of tax can be replaced with another with net gains for society. The most pernicious form of this myth advocates the creation of a brand new tax (always said to be fairer and less complex) to displace a bad old tax (such as the income tax).

If we had the will, we could abolish the income tax today. Imagine that no one filed a tax return at all this year, and all withholdings were refunded. The government would still have enough revenue from other sources to spend the whole of the budget from 2000, with some left over.